Insolvency and Bankruptcy Code, 2016 | Regulatory governance

Section 225 IBC: Power of Central Government to Issue Directions to the IBBI

Section 225 of the Insolvency and Bankruptcy Code, 2016 empowers the Central Government to give written directions to the Insolvency and Bankruptcy Board of India (IBBI) on questions of policy. The provision also contemplates giving the Board an opportunity to express its views, as far as practicable.

Text of Section 225 - Power of Central Government to issue directions

225. (1) Without prejudice to the foregoing provisions of this Code, the Board shall, in exercise of its powers or the performance of its functions under this Code, be bound by such directions on questions of policy as the Central Government may give in writing to it from time to time:

Provided that the Board shall, as far as practicable, be given an opportunity to express its views before any direction is given under this sub-section.

(2) The decision of the Central Government as to whether a question is one of policy or not shall be final.

This provision is reproduced from the original article. Check the operative statutory text, amendments and notifications through India Code and the IBBI legal framework.

Meaning and legal effect of Section 225

The Board refers to the Insolvency and Bankruptcy Board of India established under Section 188 of the Code. Central Government means the Union Government exercising powers conferred by the Code. A policy direction is an instruction concerning the general policy framework within which the Board exercises statutory functions; the section does not define every matter that constitutes a question of policy.

The words "shall ... be bound" mean that a valid written direction falling within Section 225 has binding force for the Board. The power is expressed as being "without prejudice" to other provisions, so Section 225 should be read alongside the Board's statutory responsibilities and the wider Code rather than in isolation.

Key requirements under Section 225(1)

Direction by the Central Government: The authority to issue a direction under this section rests with the Central Government.
Question of policy: The direction must concern a policy question within the statutory framework.
Written form: The provision expressly requires the direction to be given in writing.
Opportunity to express views: Before issuing the direction, the Government should, as far as practicable, allow the Board to put forward its views.
Binding effect: The Board is required to act consistently with a direction validly issued under Section 225.

Important distinction: Section 225 concerns directions to the IBBI on policy. It does not, by itself, create a general power for the Government to determine the outcome of an individual insolvency case before an adjudicating authority.

Why the opportunity to express views matters

The proviso to Section 225(1) recognises the value of the regulator's expertise. Before a policy direction is issued, the Board should ordinarily have an opportunity to communicate its position, operational concerns and regulatory assessment. However, the phrase "as far as practicable" qualifies this requirement; it is not worded as an absolute hearing obligation in every circumstance.

The proviso does not state a fixed number of days for consultation or prescribe a particular form of response. The content of any actual consultation depends on the facts and the governing legal framework.

Section 225(2): Who decides whether a matter is policy?

Under subsection (2), the Central Government's decision as to whether a question is one of policy is declared final. This allocates statutory decision-making authority on that classification to the Government. The word "final" should not be understood as automatically excluding constitutional judicial review in all circumstances; the availability and scope of review depend on applicable law and the facts of a particular case.

Illustrative example

Suppose the Central Government identifies a broad policy priority concerning the development of India's insolvency regulatory system. It may communicate a written policy direction to the IBBI under Section 225, ordinarily after giving the Board an opportunity to express its views where practicable. The Board must then exercise its functions consistently with a valid direction, while continuing to observe the Code and applicable legal requirements.

This example illustrates the structure of Section 225; it is not a statement that a particular government direction has been issued.

IBC provision	Relationship to Section 225
Section 188	Establishes the Insolvency and Bankruptcy Board of India.
Section 196	Sets out the functions and powers of the Board, which operate within the applicable statutory framework.
Section 221	Permits Central Government grants to the Board following parliamentary appropriation.
Section 222	Provides for the Fund of the Insolvency and Bankruptcy Board.
Section 223	Requires the Board to maintain accounts and provides for audit by the Comptroller and Auditor-General.
Section 225	Authorises written Central Government directions on questions of policy.
Section 226	Addresses supersession of the Board in specified circumstances, a separate statutory mechanism.

Frequently asked questions

Can the Central Government issue oral directions under Section 225?

Section 225(1) expressly refers to directions "in writing". An oral communication alone does not satisfy that stated requirement for a direction under this section.

Must the IBBI follow a written policy direction?

Yes, where the direction is validly issued within the scope of Section 225, the provision states that the Board shall be bound by it.

Does the IBBI have to be consulted before a direction is issued?

The Government must, as far as practicable, give the Board an opportunity to express its views before issuing a direction. The statute does not impose an unqualified consultation requirement.

Can Section 225 be used to decide an individual insolvency dispute?

Section 225 is framed as a power to give directions on questions of policy to the Board. Adjudication of individual insolvency proceedings remains subject to the separate jurisdiction and procedures established by the Code.

Official legislation and further reading

Article reviewed: October 23, 2026. The article is for general legal information. Consult the latest statutory text, government notifications and professional advice for a specific matter.